Law on Estoppel - A note
I. Historical Background
England was conquered by the Normans in the year 1066. The period preceding this date is called that of Anglo- Saxon law of which little is known. There was no common law for the whole of England at any time before the Norman Conquest.
With the Norman Conquest, the period of tribal rule came to an end and feudalism was installed. It prepared and paved the way for the development of Common Law.
The creation of Common Law (Comune Ley) was to be exclusive work of the Royal Courts of Justice, usually called the courts of the Westminster, after the name of the place where they sat from the thirteenth century. Common Law is that part of the law of England which before the Judicature Acts, 1873-1875 was adjudicated by the Common Law courts (especially the former Courts of Queen's Bench, Common Pleas and Exchequer at Westminster), as opposed to equity, or that part of the law which was administered by the Court of Chancery at Lincoln's Inn.
Blackstone defines Common Law as the municipal law of England or the rule of civil conduct prescribed to be inhabitants of the kingdom. It is “experience expressed in law”. It is composed of established customs, established rules and maxims such as “the King can do no wrong”.
In the earlier times the Common Law courts provided no remedy in many cases where one was required. Hence the custom grew of applying for redress to the King in parliament or to the King in Council, who referred the matter to the Chancellor. In later times petitions were presented to the Chancellor directly. The Chancellor being an ecclesiastic, and keeper of the King's conscience, did not feel bound to follow the rules of Common Law, but gave such relief as he thought the petitioner or plaintiff entitled to “in equity and good conscience”. Equity thus represents the conscience of law, and a moral correction of law in order to accord more with justice.
Common Law was administered by King's Justice on circuit and three Common Law courts, namely, King's Bench, Common Pleas and Exchequer. King's Courts administered equity also but at that time they did not regard themselves as administering a new body of law. They were trying to give relief in hard cases. Of the three courts of Common Law, the Exchequer was not only a court of law but was also an administrative department, its secretarial section being called a Chancery. The head of this section was called a Chancellor, whose business was to collect State revenue and to decide disputes concerning the same. The Court of the Exchequer department met thrice a year on the occasion of the three great feasts of the temple. The Chancellor has been described by Maitland as the “King's prime minister”.
If a person wanted to start an action at Common Law, he had to obtain a writ on payment of prescribed fees from the Chancery section. The Chancellor issued such writs. It should be noted that in the 13th Century the available writs covered a very narrow ground. An injured party could only sue at Common Law if his complaint came within the scope of an existing writ or form of action. Many genuine cases remained unredressed and the plaintiff was without a remedy because his cause of action did not fit into any of the existing forms of action.
Therefore the King and the King alone in his council who
had wide discretionary powers to do justice among the
subjects. By 1348 A.D. the King completely assigned his
equity jurisdiction to the Chancellor. Initially the
Chancellors were ecclesiastical persons. This was only
1529 A.D. Sir Thomas Moore was the first Lawyer-
Chancellor from the year 1530 A.D. and from then
onwards the Chancellors were persons trained in law. This Common Law and Equity were administered by side by side by parallel process for a long time. However, the Judicature Acts, 1873-1875 merged the jurisdictions and from then onwards, codes in England have been Courts of Law as well as Equity. Equity, in a way, gained a supremacy in that Section 25(11) of the Judicature Act, 1875 provides that where the rules of Common Law and Equity were in conflict on a particular point, the rules of Equity would prevail. In India, all Courts are Courts of Law and also Courts of Equity. The principles of Equity found statutory recognition in India in : The Specific Relief Act, 1877, The Indian Trusts Act, 1882, The Indian Succession Act, 1925, The Guardians and Wards Act, 1890, The Indian Contract Act, 1872, The Transfer of Property Act, 1882 and the Indian Divorce Act, 1869.
Estoppel is one of the principles of Equity. In fact it was originally called equitable estoppel. This has also been accepted and assimilated into Common Law in England. Estoppel is a principle which precludes a party from alleging or proving in legal proceedings that a fact is otherwise than it has appeared to be from the circumstances; The doctrine has been known by various names because it has been applied in various contexts. It is a principle evolved by equity to avoid injustice and it advances the cause of justice (as observed in the landmark judgment of (Mothilal Padampat Sugar Mills Co. Ltd. Vs. State of U.P. – 1979 2 SCC 409, 422 and in the case of Turner Morrison & Co. Ltd Vs. Hungerford Investment Trust Ltd., 1972 1 SCC 857)
It was Mr Justice Denning, in England, who first rescued the doctrine from obscurity in Central London Property Trust Ltd., Vs. High Trees House Ltd., (1956) 1 All England Reporter 256 cited with approval by the Supreme Court in Union of India Vs. Godfrey Philips India Ltd., (1985 4 SCC 369 at 383) and laid the foundation for its applicability in Robertson Vs. Minister of Pensions, reiterating and expanding the scope of its application even to the Crown in Howell Vs. Falmouth Boat Construction Co. in the following words:-
(1) that the assurances intended to be acted upon and in fact acted upon were binding, and
(2) that where a government department wrongfully assumed authority to perform some legal act, the citizen is entitled to assume that it had that authority.
Section 115 of the Indian Evidence Act, 1872 defines Estoppel as follows:-
When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.
The section says that when one person has by his declaration or act or omission intentionally caused or permitted another person to believe a thing to be true AND to act upon such belief, neither he nor his representative shall be allowed to deny the truth of that thing in any suit or proceeding between himself and such person or his representative. To invoke the doctrine of estoppel three conditions must be satisfied;
1) representation by a person to another
2) the other shall have acted upon the said representation and
3) such action shall have been detrimental to the interests of the person to whom the representation has been made. Even where the first two conditions are satisfied but the third is not, there is no scope to invoke the doctrine of estoppel. (Gyarsi Bai Vs. Dhansukh Lal AIR 1965 SC 1055)
The burden of proving the ingredients of this section lies on the party claiming estoppel. The representation which is the basis for the rule must be clear and unambiguous and not indefinite, upon which the party relying on it is said to have, in good faith and in belief of it, acted. (B. Coleman & Co. Vs. P.P. Das Gupta AIR 1970 SC 426). This rule is founded upon the doctrine laid down in Pickard Vs. Sears which was decided in England in the year 1837, which for the first time laid down the principles in clear terms.
Estoppel applies not only in favour of the person induced to change his position but of a transferee from such person, and it binds not only the person whose representations or actions have created it, but all persons claiming under or through him by gratuitous title. ( As decided in 1918 20 Bom L.R. 851, 45 Cal. 909 and 94 Cr LJ 1291 Kerala)
Estoppel is a rule of civil action. It has no application to criminal proceedings. A limited application can take place in criminal matters also. For example, Sukhdev Singh Vs. Union of India, 1989 Cr LJ 1340 Delhi, copies of the documents mentioned in the statement of grounds of detention not supplied to the prisoner. Therefore he could not make effective reply, the Government was not heard to say that the documents were only causally mentioned.
Estoppel differs from presumption. An estoppel is a personal disqualification laid upon a person peculiarly circumstanced from proving peculiar facts; whereas a presumption is a rule that particular inferences shall be drawn from particular facts, whoever proves them. Estoppel and waiver are different. Estoppel is not a cause of action. It may assist a plaintiff in enforcing a cause of action by preventing a defendant from denying the existence of some fact essential to establish the cause of action. Waiver, on the other hand, is contractual and may constitute a cause of action; it is an agreement to release or not to assert a right. There is no such thing as estoppel by waiver. (Dawsons Bank Ltd. Vs. Nippon Menkwa Kabushiki Kaisha (1935) 37 Bom LR 544).
The generally accepted connotation of waiver is that to constitute waiver there must be an intentional relinquishment or abandonment of a known existing legal right, or conduct such as warrants an inference of the relinquishment of a known right or privilege. Waiver of a right cannot be lightly inferred and something more than inaction of the right holder in exercising the right is necessary. (Ram Raksh Pal. Vs. Brij Nandan, AIR 1697 All 325) Firstly, waiver should be voluntary and intentional and secondly, there should be two parties – one waiving and the other getting benefit from such waiver (Chetan Das Vs. Annusuiya 1996 A1HC 1706 (Raj)
Kinds Of Estoppels
There are different kinds of estoppels:
1) estoppels by matter of record;
2) estoppels by deed; and
3) estoppels in pais.
Estoppel By Matter Of Record
A matter of record is something part of the records of a Court. It is at once the narrative and the proof of its proceedings. Estoppel by records results from the judgment of a competent Court. The law allows a party ample opportunity, by way of appeal and otherwise, of upsettinga a wrong decision. And if he takes the opportunity and fails, or does not choose to avail himself of it, he cannot subsequently re-open or dispute that decision. And not only the parties themselves, but also the heir, executor, administrator and assign of each of them are bound by the decision, for they are privy to the estoppel. Estoppel by matter of record is chiefly concerned with the effect of judgments and their admissibility in evidence, and this kind of estoppel is dealt with Sections 11 to 14, Civil Procedure Code and Sections 40 to 44 of the Evidence Act. It is the final decision and not any and every expression of opinion in a judgment which gives rise to an estoppel by record, and the actual decision cannot be carried further than the circumstances warrant. The general principle which runs through the doctrine of estoppel by record is that a decree is an order of the Court and the judgment-debtor must, when it has once been completed, obey it unless and until he can get it set aside in proceedings duly constituted for the purpose.
Estoppel by Deed
Where a party has entered into a solemn engagement by deed as to certain facts, neither he nor any claiming through or under him is permitted to deny such facts. This rule, however, is subject to certain, qualifications:-
1) The rule applies only between parties and privies and
only in actions on the deed.
2) No estoppel arises upon recitals or descriptions which are either immaterial or not intended to bind
3) No estoppel arises where the deed is tainted by fraud or illegality.
4) A deed which can take effect by interest shall not be construed to take effect by estoppel. Thus if a party leases premises to another for a long term than he himself possesses, it only ensures to the extent of his own interest and no further.
The doctrine of English Law as to estoppel by deed does not apply to written instruments in India. Deeds and contracts in this country are to be liberally construed. The form of expression, the literal sense, is not to be so much regarded as the real meaning of the parties which the transaction discloses. (Hunoomanpersaud Panday Vs. Mussumat Babooee Munraj Koonweree (1856) 6 MIA 393, 411 and Johnson Vs. Gopal Singh (1931) 12 Lah 546.
Estoppel In Pais
Estoppel in pais arises 1) from agreement or contract; and 2) from act or conduct of misrepresentation which has induced a change of position in accordance with the intention of the party against whom the estoppel is alleged. To raise an estoppel by conduct, a person must by word or conduct induce another to believe that a certain state of things exists, and to cause that other to act on that belief in a way he would not have done had he known the facts, so that, if in an action between them the person making a representation were allowed to prove the true facts – to tell the truth – the other person would be prejudiced. It these two conditions are fulfilled, then the person making the representation will not be allowed to deny its truth in any action between him and the person whom he made it or the persons who claim in the same right. But in any other action he can deny its truth. The ways in which a person may a person may make such a representation are infinite. He may speak or write, act or omit to act, or act negligently.
The conduct of appearing before a selection committee
without any objection as to the constitution of the
committee would create an estoppel preventing the candidate from challenging the constitution of the
committee even if the decision was against him.
Arbitrators failed to make an award within time. The
Court passed a consent order entitling the umpire to
proceed. The party who submitted to his jurisdiction and
participated in the proceeding was held precluded from
challenging it. A candidate appeared at a competitive
examination on the basis of a prospectus. He failed. He
was not allowed to challenge the validity of the
prospectus as to the selection already made. A candidate
who applies for revaluation is bound by the new result
even if his score is reduced. Where in an accident claim
petition the owner of the vehicle did not file the original
policy and made no objection to the genuineness of the printed copy filed by the insurance company, the owner cannot later on make objection to its genuineness.
Promissory Estoppel predominantly applies to the field
of public law. The starting point of such application was
in the case of (Collector of Bombay Vs. Municipal
Corporation of Bombay, AIR 1951 SC 469) wherien
Chandrasekara Aiyar J. expressed the view that holding
out of a promise on the government was binding on the
government and the Court of equity must prevent the
perpetration of a legal fraud. Anglo-Afghan Case, AIR 1968 SC 718 accepted the view and applied the principle against the government, negating the doctrine of executive necessity as a defence. In Century Spinning and Manufacturing Co. Ltd. Vs. Ulhas Nagar Municipal Council, 1970 1 SCC. The principle was applied to the public body, namely, the municipal council.
The principle, however, found its powerful exponent in
Bhagwati. J. In Mothilal Sugar Case (1979 2SCC 409).
Subsequently in Jitram Case (1981 1 SCC 11). The
decision of Mothilal Sugar Case was held to be in
accordance with the view consistently taken by the
Supreme Court. However, the conflict was resolved by
the Supreme Court in Godfrey Philips Case which was
reaffirmed the Mothilal Sugar Case decision and again the principle gained full vigour in Gujarat State Financial Corporation Vs. Lotus Hotel (P) Ltd. (1983 3 SCC 379) and later in the case of Express Newspapers Case.
Over the years that passed by, the doctrine has gained a new dimension. In that, originally it was looked as rule of evidence, a weapon of defence; but now it is also weapon of offence and estoppel can be a cause of action or basis of a cause of action. The place of promissory estoppel is now well established in administrative law.
There are other types of estoppel also like estoppel by election (Doctrine of Election), estoppel by latches, estoppel by silence and estoppel by warrantee. Estoppel of tenant and licencee is contained in Section 116 of the Evidence Act.
Thus, estoppel, as a principle of the law of equity, is applicable both in the sphere of substantive law and procedural law. Its importance can never be overstated. It has ossified as a first principle in Indian law and its variety and applicability keep expanding from one branch to the other.